Clouds of FOMO

Observations on Crypto (August 21')

Hey Everyone. It’s been quiet here for quite some time. I have been thinking a lot. Also, growing personally, in a variety of ways.

The pace at which things are happening is extraordinary.

If you’re plugged into Twitter often, it’s hard not to be swept up by it. There are takes everywhere about everything. 

I hope that this newsletter provides some curation of the hive brain. Some filtering of the firehose.

Stacking Sats is an Imperative now.

When I wrote about my (*this post is not financial advice) Bitcoin thesis. Here’s what I said:

To send yourself or your family money into the future through this Bitcoin mechanism (which appreciates in value as the supply decreases) can produce a financial result beyond any other asset available to us in the world today.

This had taken me roughly 2 years to fully grok (from ~Summer 17) and since then we have re-entered a bull cycle.

Today, it seems that every 6 months, a new primitive in Crypto land is built which unlocks the next level of value for the industry.

If crypto is an internet-sized elephant we do not yet understand, we are starting to feel out the trunk, some feet, and maybe about 10% of the beast that we are all collectively uncovering.

Some examples have been Defi, collectibles/NFT’s, lending/borrowing, and play to earn gaming.

I’ve long tried to urge friends/family (cautiously) about “stacking sats.”

The basic idea is that you want to “Dollar-Cost Average” into crypto (Or BTC specifically).

By buying small amounts of Bitcoin or ETH over time (Daily, weekly, monthly) you average out your buy price. 

This means you do not need to time the market.

Simply start putting $5-$50/week/month into these protocols over time and catch dips as well as price rises.

You can do this on every major exchange.

I believe this is a decade-long trade. 

That means that buying over time and holding is an excellent strategy for capturing the upside. 

While the previous urges were about the potential for gain.

I now feel a reverse magnetic pull that is about the fear of being left behind. 

I think we are seeing this at the corporate level as well as the individual. 

What I mean is that due to the network and price growth of crypto, over a long enough time scale I foresee cryptocurrencies *creating a greater divide of income inequality* simply due to the unit of account we choose to hold.

I, have mentally switched off of the Fiat Standard.

This means that virtually 100% of my liquid net worth is in crypto and I never intend to return. I move into Fiat to pay bills as an inconvenience.

Crypto rails are superior in application and in appreciation. 

This also has greatly changed my view on banks, which I also hope to get away from as soon as possible. Until this is possible I will deal with Fiat Paper the way I deal with physical mail instead of email or text messages. An old-world relic that somehow persists. 

The conclusion of this shift is that crypto is no longer a “trade” to make. 

It’s a system to move onto. A raft that is gaining speed to join.

The good news is that the ethos of openness to all is inherent to the system.

So anyone who wants to can join. It’s a choice, not coercion. 

Wealth is minted in crypto 10x faster.

As this raft of crypto accelerates in value and development, we are seeing more wealth be created faster than at any time in history.

The fastest growth of company headcount is in crypto. 

The fastest valuation growth of companies is in crypto. 

You are seeing companies like Binance scale from 0-1,000+ employees in 3 years. 

This means individuals will become wealthy through crypto faster than at any time in history. 

It is not inconceivable for someone to create hundreds of millions of dollars in 3-5 years in crypto. 

Compounding this growth over time, both on the technology level and on the investment level is also faster.

Venture Capital returns can almost seem antiquated. 

While the risk is higher, the speed of return is much greater, and often liquid from the very start. 

And this is open to the public.

Last year, Solana’s token SOL was priced at $2. 

Today it’s ~$72. 

That is just one year and you can exit the position and move onto the next if you’d like to.

If there is more liquidity, investment cycles speed up.

If investment cycles speed up, there are faster compounding returns. 

All of this means that crypto is an even greater wealth transfer and generation mechanism than internet startups. 

And it’s happening faster. 

Crypto is a technology revolution and a money revolution.

Part of the confusion from most people outside of crypto is the terminology. 

We use the phrase “Cryptocurrency” however we mean a WIDE variety of things.

Assets, currencies, tokens… these have different use cases and should not be in the same bucket.

The word currency is often associated with being a means of exchange, and so people say that Bitcoin is not money because you don’t often spend it on goods.

That said, Bitcoin has fulfilled the “store of value” role of money well historically. 

Stablecoins, however, are great mediums of exchange within certain perimeters. 

Ethereum is wildly different but also competes on some vectors of money (medium of exchange, store of value). 

But really it is a compute state that functions more like an open social network that you can transfer value on. 

The point is that crypto is many different things. It is disrupting money by unbundling it and 1000xing its properties. 

It’s also a technological revolution that will wedge in and displace Web2 companies by building out an entirely different architecture for value creation and capture.

Good tweet on this subject:

FOMO Clouds Thinking Because Stupidity Works in Bull Markets.

You might be feeling FOMO right now because NFT’s are the most in your face “crypto is taking over culture” messages that we’ve ever seen.

NFT’s today pair scarcity with status in an elegant way via the PFP (Profile Pic) which translated your economic income and or cultural prowess right into the social media feed.

“Lambo” money is so last cycle.

Now you can flaunt a $20M JPG as your profile photo, and not only signal status but *affiliation*.

Sometimes it’s the stupidest trades that work. The things you know nothing about that pay off in the short run. But markets change incredibly quickly.

Just 3-4 months ago in mid-May things were painful, and the industry felt ominously bad.

The tide can go out very quickly, so seek to think long-term and about what carries substance rather than the appearance of substance.

So it’s never been more important to pause and check-in with yourself about your motives.

Having a sense about yourself, what your long-term plan is, dedicating your time to substance over hype will ground you back to what matters.

It’s a good idea to “Question why it is that you’re wanting what you’re wanting.”

Book recommendation: Wanting: The Power of Mimetic Desire in Everyday Life.

Social networks have hyper-driven status competition games.

When bull markets happen, FOMO triggers all of us.

Basically how I feel not FOMOING:

As I said, this is a decade-long process. And your life, if lucky, is another handful of decades.

So it’s a marathon, and ultimately we want meaning, connection, and personal growth through adversity.

Stay calm, keep stacking Sats, and check-in with your feelings,

xx David

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I’m David. I am a partner to Founders at the early stage.

I founded Death to Stock and help organize Jacuzzi Club. etc. etc.